The Federal Open Market Committee (FOMC) of the United States Federal Reserve (Fed) has decided to unanimously approve an increase in the country’s interest rates of 25 basis points, until placing them in a target range between 5% and 5.25%, as reported this Wednesday.
Unlike the last 25 basis point hike announced on March 22, this time the Fed has not mentioned that further rate hikes are needed to tame the price rally and return inflation to the 2% target. Thus, we could find ourselves facing a possible pause in interest rate rises after the ten consecutive rises that have already placed the price of money at 16-year highs.
However, when determining the increase, the progressive tightening of monetary policy, the “delayed effects” of monetary policy on economic activity, inflation and the financial sector will be taken into account. In addition, the Fed ensures that “it is prepared” to “adjust” its monetary policy if “risks emerge that prevent the achievement of the Committee’s objectives.”
On the other hand, the Fed’s balance sheet reduction plans remain unchanged, reinvesting the principal of the debt that matures, with the exception of 95,000 million dollars (85,817 million euros) each month, between Treasury bonds and mortgage securities .
The economy of the first world power experienced an annualized growth of 5.1% of its GDP in the first quarter of 2023 compared to 6.6% in the last stretch of 2022, according to the Office of Economic Analysis (BEA, for its acronym in English).
As for the US market, it created 236,000 jobs last March, so unemployment fell one tenth to 3.5%, according to the Labor Department’s Bureau of Labor Statistics.
In this way, unemployment in the US remains close to the minimum unemployment rate registered in January, when it reached 3.4%, which was its lowest rate since 1969.
For its part, the personal consumption spending price index, the variable preferred by the Fed to monitor inflation, stood at 4.2% year-on-year in March, nine tenths below the previous month. The monthly rate registered an expansion of 0.1%, two tenths less.
The underlying variable, which excludes energy and food prices from its calculation due to their greater volatility, closed at 4.6%, one tenth less.
